Dispelling Media's 3 Major Myths

As the industry evolves into an increasingly digital, increasingly connected and increasingly device-dependent model, some say the media has perpetuated myths about the future of entertainment. So much so, say researchers at The NPD Group, that boardrooms have been swayed by less-than true assumptions about how consumers will interact with content over the next several years.

According to NPD's Russ Crupnick, the popular (and not-so popular) press has "propagated" three major myths about the future of content delivery, namely: 1) free video, 2) digital everything, and 3) social media. In a new report dispelling these misunderstandings, the senior analyst says these myths have "supernatural" qualities fueled by stories with "no basis in fact."

Myth #1: Free Video. Citing NPD's recent Digital Video Outlook report, Crupnick notes that the research firm has projected average monthly pay-TV bills to increase from $86 today to more than $200 in 2020. The analyst said media took this information to mean that consumers would abandon cable and satellite providers in favor of free or low-cost OTT options, or cut their premium channels to the bone.

Fact: "Unless (consumers) want to watch videos of dancing cats or kids skateboarding, they will pay for premium content," Crupnick says. The analyst writes that the cost for a suite of OTT options from Netflix, Vudu, Amazon et al is "almost identical" to savings from cutting back on premium offerings. "If you are an avid TV watcher and believe 'free' is the future - I have a unicorn I'd like to sell you."

Myth #2: Digital Everything. Crupnick says while the future is undoubtedly in the cloud, the industry still has a long way to go before getting there.

Fact: Despite the increasingly connected environment, the analyst says physical media is still very much alive. "In the U.S. today there are 30M more CD buyers than purchasers of paid digital music downloads. And when it comes to video, there are eight DVD or Blu-ray movie buyers for every buyer or renter of a digital movie download."

Myth #3: Social Media. Numbers show that as much as 40% of internet users are using social media to track an artist or band on Facebook, Twitter or YouTube. However, Crupnick says while there are occasional instances of social media creating major success stories, could the medium be overrated?

Fact: "New research suggests social media is over-hyped as a driver of discovery and purchase," the analyst says. Citing NPD's own data, "Facebook and Twitter were much less effective in driving sales than were other media and marketing tools (such as) Pandora, Spotify and other online radio options."

"Whether we're taking about a world of free entertainment, the digital experience, or social media, there is a supernatural aspect propagated by a flock of early adopters, exuberant analysts, and media outlets hungry for something new to talk about," Crupnick says. "That's where market research and consumer insights come in, bringing us back to reality and helping to put the future into context." •

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Liberty Moves on SiriusXM - Verizon v. FCC in 2013? - Why Facebook is Doomed

Strategy: Liberty Media is planning to convert enough of its preferred shares in SiriusXM to common stock that would give the media conglomerate 32% of total voting shares. Deadline says the company will then nominate a new board of directors. --- Both Google CEO Larry Page and Facebook's Mark Zuckerberg are exploring an investment in Vevo as part of a broader partnership with the music-video service. NYP has the story. --- Is DISH honcho Charlie Ergen underestimating the negative impact of ad-hopping in favor of a slight uptick in customer satisfaction? Analysts at SNL Kagan say it's a real concern. Read more. --- Here's InvestorPlace's 5 Lessons from LightSquared's Failure (hint: politics).

Rules & Regs: President Obama's Council of Advisers on Science and Technology is planning to recommend that as much as 1,000 MHz of government-held spectrum be shared with commercial broadband networks. Bloomberg has the story. --- FCC Commissioner Ajit Pai commended the House for passing the FCC Consolidating Reporting Act helping to modernize the agency's reporting obligations. --- The FCC is seeking nominations in July for the 2nd Annual Chairman’s Awards for Advancement in Accessibility that recognizes innovations in technology accessibility.

In Court: The federal lawsuit Verizon filed against the FCC last year in opposition to the agency's net neutrality order likely won't begin until next year. Reuters has the story. --- Not much new info coming from Aereo v. Broadcasters, but WSJ has updates here. --- A Michigan man successfully sued the World Financial Network National Bank for making 56 robo-calls to his cell phone in an attempt to collect a debt he did not owe. Local courts awarded him $62K ($500 per call) in damages. The feel-good story for the day...

QRs: TiVo posted an increase of 235K subs during its fiscal Q113 on the back of distribution deals with DIRECTV, Virgin Media, Suddenlink and others. However, legal costs sapped earnings as the DVR company reported a net loss on the period of $20.1M ($.17 per share). TiVo's revenue increased $22M y/y to $67.8M.

Deals: Suddenlink renewed its distribution deal with iN Demand for PPV programming in standard-def and HD. --- Bright House Sports Network (BHSN) signed an agreement with the Florida High School Athletic Association (FHSAA) to produce and distribute all state quarterfinals, semifinals and final series athletics for the next three years.

Research: Pyramid says total global pay-TV accounts will eclipse 1B in 2014. The firm says cable will account for 58% of worldwide subscriptions, down from 66% in 2011. --- Insight projects that all US businesses will spend $154B for telecommunications services this year with a CAGR of 4.8% to reach $184B by 2016.

Service: CEPro is reporting that Cox will join its fellow cable operators and enter the home automation market. The pub found a job description for VP of Cox Smart Home Business and connected some (industry trend) dots. Details here. --- Bright House made its TV app available for iPhones and select Android devices. --- AT&T is rolling out a new bill format for U-verse subs called a 'video bill' featuring customized video elements detailing each subscribers' monthly bills. Details at the company blog.

Programming: BlueHighwaysTV will air a video version of WSM Radio's "The Music Row Show" featuring behind-the-scenes content from the music biz in Nashville starting in early June. --- "Rotten Tomatoes Radio" will launch on SiriusXM next week. Cool!

Footprint: AT&T expanded its 4G LTE network in Cleveland.

Tech: Mobile payment firm boxPAY has developed a solution that allows connected-TV owners to purchase TV apps from a mobile device without registration or credit card information.

Ratings: The History Channel's super-hit mini-series "Hatfields & McCoys" beat its own record with 14.3M viewers on the third night.

$$$: CBS CFO Joseph Ianniello says the network has already sold about 50% of its available ad spots for next year's Super Bowl. --- Rogers priced an offering of $1.1B in debt securities, consisting of $500M worth of 3% Senior Notes due 2017 and $600M worth of 4% Senior Notes due 2022.

Over, Up, & Under: Amazon's LOVEFiLM launched HD streaming in the UK and Germany. --- ARRIS said Kabel Deutschland successfully field-tested a combination of EuroDOCSIS 3.0-based ARRIS-developed cable modems accessing 8 MHz channels while delivering 4.7 Gbps downstream. --- Sony Pictures Television Networks said Hollywood Suite will be the exclusive home of Sony Movie Channel and AXN Movies in Canada starting in September.

Green: Verizon said it has successfully ended the automatic delivery of 33 of 44 residential 'white pages' directories in California.

People: Disney named former Warner Bros. chief Alan Horn as new Chair of Walt Disney Studios overseeing distribution and marketing for Disney, Pixar, Marvel and DreamWorks.

Ha!: Want to know why Facebook is doomed? Click here.

--- Catch today's media market news in The Evening BRIDGE. •